What exactly is Consensus? What specifically are the key communication roadblocks in the healthcare industry and how does Consensus solve them? Why don’t EHR’s develop their own tech to do what Consensus does? As Healthcare interoperability solutions are core to your development, what is your product roadmap timeline?  What makes your value proposition to the healthcare sector unique? What is the risk that there could be changes in healthcare information communication protocols that negatively impact your business? Who are key competitors and how does Consensus compare? What is your total TAM? What’s the mix of your Corporate customers based on size and type? How big is the market for Corporate Fax? Why is this market growing? If the Corporate Fax market has such an attractive growth profile, how much risk is there for new entrants?  As the SOHO segment makes up about half of your revenue, how should investors think about this side of the business?  How is it different from your Corporate segment and are there any growth opportunities in the SOHO market? What are the drivers of the Corporate channel overtaking the SOHO channel? How are Clarity, Unite, Signal and jSign integrated with existing eFax? What’s the revenue contribution from them? What does management expect as revenue contribution from new products such as jSign, Clarity, Harmony etc. over the next few years? Do any of these products cannibalize existing corporate fax revenue or is the opportunity incremental? What is the nature of your recently announced contract with the VA? Is there an advantage to being FedRAMP certified? What is your view on M & A for growth? Or will you grow more organically?

What exactly is Consensus?

Consensus focuses on providing secure cloud document and data transmission services throughout the healthcare ecosystem through a simple secure API connection that integrates easily into health record and patient management systems. We have been a leader in the digital fax space for over 20 years and have focused this service to address the needs of the healthcare industry in the past five years.  The healthcare industry is the single largest user of fax services. We purposefully built a team focused on the healthcare industry needs, and have invested more than $100 MM to solidly position Consensus. The Company leverages its technology heritage to provide solutions that transform unstructured digital documents into secure, advanced healthcare standard HL7/FHIR structured data. 

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What specifically are the key communication roadblocks in the healthcare industry and how does Consensus solve them?

Healthcare industry communication and workflow challenges occur because that ecosystem consists of multiple devices, systems, and vendors that must communicate with multiple protocols spanning a wide variety of endpoints. Think about hospitals, labs, insurance, clinics, etc. — each with their own chosen system of sending and receiving that are, most often, unique.  It is a highly fragmented environment that forces participants to communicate in multiple protocols that are not compatible with each other.  This adds significant complexity, cost, effort and capital outlay with no guarantee that messages will actually reach their destination.

The central problem arises from the multiple protocols (HL7, FHIR, Direct Trust messages, ScriptStandard), the lack of a standard routing framework (in banking you have SWIFT codes and routing numbers, in healthcare no such equivalent exists), dictionary differences in in medical terminology, many different EHR systems with many different software versions, and the list goes on.  If you send a message, you have no assurance that it got there, and if you receive a message, you have no assurance of where it came from or whether it will be in a format (or dialect) your system can understand.  Across that messy environment, fax is the embedded common denominator that verifies delivery, is highly secure, includes complete originating information and is HIPAA compliant.  Our position as the leading provider of digital cloud fax technology offers an important advantage in establishing relationships in the sector, proving the reliability of our service, demonstrating the security of our system and our commitment to high service levels.

Our established position is a leverable advantage.  Add to that the product set that we have recently released through both our own development efforts and targeted acquisitions.  Consensus has commercially released HL7, FHIR, Direct Trust messaging and digital electronic signature, and currently delivers billions of messages in the sector.  Right now, that is primarily fax - this reflects the choice of the customer.  In the future, Consensus is already in place and educating customers and prospects about the full suite. 

The healthcare communication environment is nearly exclusively a point solution market.  The lack of an established routing framework effectively forces participants creating point to point connections to ensure security and authenticity.  Users of HL7 systems need an HL7 vendor, then they need a direct connection to their target; and finally - need to have a message translator (interface) to take incoming messages over that connection and structure them to be consumed by their system (e.g. the receiving system is Epic 12.2.4 and the message came from Cerner 10.8.0). That would let one hospital speak with one other hospital. Repeat that for every hospital, lab, pharmacy, nursing home, clinic etc. that a single hospital shares information with.  A large hospital can easily have hundreds of interfaces, each running custom-developed software, each requiring software maintenance expense, sitting in a data center that costs money running on servers that consume capital dollars and managed by an expensive IT staff.  Complicating things further, when that Cerner system that communicates with the Epic system upgrades to v11.0.0, the interface breaks.  Worse, when our example hospital upgrades to Epic 12.4 they ALL break.  Finally, now that I have my HL7 interfaces, I need to go and select my DirectTrust secure messaging vendor, FHIR vendor, build new interfaces etc.  The cost and complexity are staggering.

Consensus, as a result of our established Digital Cloud Fax network, has many established connections with hospitals, labs, pharmacies, payers etc and is a natural hub.  Second, our secure, scalable cloud architecture eliminates the need for installed software and associated costs.  Third, the Consensus product suite can deliver across the spectrum of protocols, allowing healthcare stakeholders to have a single vendor to manage.  One single connection Consensus, with our wide range of verified endpoints offering every major healthcare communication protocol eliminates the need for all those interfaces.  No other company is addressing the interoperability opportunity with this approach.  We are unique in capabilities, well penetrated because of our position in fax and a known quantity in terms of service, security, and reliability.  Scale gives us a large cost advantage, our modern architecture allows fast product deployment as new technologies emerge and, as a public company, Consensus eliminates the risk associated with so many small private single-point vendors in the space.  

In healthcare today, HL7 views DirectTrust as a competitor, CMS has dozens of committees for the last 20 years studying the viability of various protocols and network solutions and remains no closer to an answer then they ever were. With single-point vendors slugging it out to displace each other in a one-protocol paradigm, administrative costs in healthcare continue to skyrocket. We solve that simply, elegantly, reliably, securely and at a fair price. EXAMPLE: Consensus Clarity Demo here: https://www.youtube.com/watch?v=DErsjGTgubI

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Why don’t EHR’s develop their own tech to do what Consensus does?

Most EHR solutions do a wonderful job communicating to other “like” systems (i.e., Epic to Epic, Cerner to Cerner etc.). Challenges arise when communicating from one EHR to another, and this is an area in which we excel. In addition, communication outside of a network has security implications that EHR vendors would generally want to avoid but the Consensus system is hardened to ensure safe and secure delivery across networks. There are also complexities around protocol acceptance. For example, if a customer sends an HL7 message, can the counterparty receive it? We know from our own customers (many of whom are EHR systems where we often white-label our technology) that this is an area of technology EHRs are happy to outsource to a third-party expert.

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As Healthcare interoperability solutions are core to your development, what is your product roadmap timeline? 

In 2020 we launched Unite, a product that combines secure direct messaging – the recognized standard for healthcare specific secure email – cloud fax, patient record query via Kno2’s Carequality interface, workflow tools and the ability to switch mode of transport based on the sender’s preference.  In 2021 we launched jSign, a secure digital signature product built on block-chain technology for incredibly reliable authentication, and in March 2022 we released Clarity, an advanced technology product that uses natural language processing technology to extract unstructured data and arrange it in a structured format.  This is a powerful automated intelligence tool that can eliminate the need for humans to manually enter data into systems.  It streamlines workflows that save time and money while improving accuracy of the ingested data.  Later this year we are planning the release of Harmony, a communication network that we believe will greatly simplify the ability for connected communities to share information with a minimum of transactional friction.

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What makes your value proposition to the healthcare sector unique?

The healthcare sector is an important market for the company, comprising over half of our SMBE revenue and roughly two thirds of new sales for that stream of revenue.  Our success in healthcare grows from two distinct and differentiated value propositions.  First, our integrated product set offers the ability to access every widely used and HIPAA compliant communication protocol from a single platform.  The full suite of capabilities we offer is unique in the industry, and we are the only interoperability vendor that includes cloud fax in their solution set along with HL7, FHIR, Direct Secure Messaging, medical record query and electronic digital signature.   Second, since we are a cloud solution, our communication package eliminates the need for costs associated with hardware, data center space, IT staff and expense software maintenance costs.  The Consensus solution is singular in our comprehensive approach to communication, security, process automation and transformation tools.

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What is the risk that there could be changes in healthcare information communication protocols that negatively impact your business?

While we would certainly anticipate advances in technology, the risk of those changes negatively impacting Consensus is low. Changes in healthcare communication are very slow to market. Any change that could be (eventually) widely adopted will require many years of testing and certification (including HIPAA) before it would become generally available. Since Consensus is committed to offering a full set of capabilities in our platform, we have the goal to incorporate any proven, utilized and approved technology in our tool set. 

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Who are key competitors and how does Consensus compare?

Our unique differentiator is that Consensus promotes a variety of HIPAA compliant protocols for the transmission of documents and data under one common platform. Whether a customer uses fax, HL7, FHIR, Direct Secure Messaging, or a customer needs to use a digital signature as a vessel for delivering documents, Consensus will supply all of those technologies and the capability to transform it in route. Easy choices not demanded mandates. Here is an example. https://www.youtube.com/watch?v=DErsjGTgubI

We have competitors for individual technologies; cloud fax (OpenText, Concord Technologies, BisCom), Direct Messaging (HISPs - MedAllies, Secure Exchange Solutions etc.) HL7/FHIR (InterSystems, Lyniate) and each competes with us in their own sector.

The Consensus difference lies in our ability to deliver a full-service multi-protocol secure cloud platform.  This platform eliminates the need for an entity to manage multiple communication applications, delivering a single robust cloud solution that is reliable, secure and affordable.  It enables the sender to use the technology that fits with their workflow, and similarly affords the receiver the ability to choose the inbound protocol that best suits their needs.  There’s no longer a need to compromise on how an information flow is optimized.

With Consensus, not only can our technology accept the protocol that the customer frequently uses, our transformation engine will allow delivery in  exactly the way the receiver would like to have it. For example, a sender sends a fax, but the receiving party gets an HL7 message, by their choice.

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What is your total TAM?

Research indicates it is in excess of $10 B and growing.

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What’s the mix of your Corporate customers based on size and type?

Our healthcare customers are across a full spectrum from small offices to large EHRs across all disciplines. Healthcare comprises 33% of all customers, 52% of our corporate customers and about two thirds of new sales in our corporate channel. Along with healthcare, our corporate customers range include financial services, legal, manufacturing and government agencies.

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How big is the market for Corporate Fax? Why is this market growing?

The most research we have seen on the revenue size of the small, medium business and enterprise (SMBE) market at roughly $2.3 billion and expected to grow at about an 11% CAGR over the next 5 years (Arizton Fax Services Market Global Outlook 2022 – 2027.) There are multiple factors that keep fax a relevant and growing communication technology.  We’ve done our own industry surveys and the top reason for faxing is that the recipient requires it – that’s the power of workflow.  Other reasons are convenience, strong security, the ability to confirm receipt, reliability and legal compliance. People are just trying to get their job done in the most convenient way possible, and fax is often part of that solution.  We’re a consumer of market research on the subject of cloud fax and there’s certainly consistency in the reports we see that forecast the on-line fax market to grow in the high single digits for the foreseeable future.

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If the Corporate Fax market has such an attractive growth profile, how much risk is there for new entrants? 

There are a number of barriers to entry to this market that afford advantages for Consensus.  First, is the continued misconception that the demand for digital cloud fax is diminishing, discouraging potential entrepreneurs and suppliers of seed capital from considering entry.  Past that, building an enterprise grade cloud fax system is technically challenging and capital intensive.  Over the past 25 years Consensus has amassed 125 patents in the area of fax technology, pioneered the ability to integrate fax with email systems, built applications for corporate administration of their fax environments, invented fax-integrated workflow systems and pioneered auto scaling for on demand capacity management. Finally, the expertise required for integration of fax systems into central systems of record like EHRs, ERP and SFAs is a specific technological capability that is not easily replicated.  

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As the SOHO segment makes up about half of your revenue, how should investors think about this side of the business? 

It’s a solid business that throws off cash and gives us a reasonable return.  Access to the SOHO market is advantageous for selling products of interest (jSign) as a companion to fax. It allows us to leverage the brand recognition that SOHO affords us by offering complimentary technologies as cart options for new subscribers.  

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How is it different from your Corporate segment and are there any growth opportunities in the SOHO market?

The sales approaches are very different, with SOHO being virtually exclusively an eCommerce channel that’s marketed and sold in a self-service environment with pre-packaged subscriptions.  The Corporate segment is always sales-assisted and offers a host of options for configuration, customization, integration and bespoke solutions. 

SOHO certainly has growth opportunities – we can see usage levels in the subscriber base continuing to grow triggering usage charges for customers who exceed their plan limits, we also have the ability to position a product like jSign to market as both a bundle with one of the fax solutions as well as a stand-alone subscription.  There is generally an incorrect view that the number of subscription accounts is the measurement of growth in SOHO.  This is a larger story than that.  We would not characterize the SOHO as the company’s growth engine; however, it provides a steady source of revenue.  

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What are the drivers of the Corporate channel overtaking the SOHO channel?

Our investment and concentration in growing the Corporate market is the primary driver.  Since 2017, our shift to building a secure, scalable enterprise grade platform to meet the market’ needs have resulted in impressive growth in the Corporate space.  While SOHO remains a steady performer, the driver behind this shift is our decision to aggressively pursue larger commercial customers with an emphasis on healthcare.

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How are Clarity, Unite, Signal and jSign integrated with existing eFax? What’s the revenue contribution from them?

Unite and Signal incorporate Cloud Fax as a key delivery method alongside the other digital protocols. We view jSign as a fax companion specifically for signature workflows across several industries. Our revenues primarily come from our cloud fax business with a modest amount from our additional interoperability products (as they are new to the market) and there is still a large transition opportunity Cloud Fax to replace on-premise fax solutions. 

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What does management expect as revenue contribution from new products such as jSign, Clarity, Harmony etc. over the next few years? Do any of these products cannibalize existing corporate fax revenue or is the opportunity incremental?

Our current product roadmap is disclosed through the end of 2022. In early 2023, we will release the product roadmap for the next two years.  Our first set of milestones is hitting the release date for these services and we have thus far. Most of these will map to the corporate channel.

From a data standpoint, it’s important to look at the metrics that we report, the total number of customers, most notably the ARPU, the average revenue these accounts produced per month and the retention rate.

The advance of these products is not expected to cannibalize existing revenue streams as new products which are being developed represent a complimentary product suite to stand together with fax. We have commercialized eFax and jSign for our SOHO and Corporate customers.   

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What is the nature of your recently announced contract with the VA?

The VA is working on a large-scale digital modernization initiative, and we’re very happy to be partnered with Cognosante to deliver the ECFax platform.  The idea of modernization here is very important because it characterizes the position of digital cloud fax – a modern solution for secure, reliable, verifiable and scalable secure document communication.  It also highlights a key advantage that our fax products in particular have in this marketplace – a native cloud model that replaces physical servers to do the work. 

When the solution is meaningfully deployed across their more than 1,200 locations, we expect revenue of approximately $10 MM per year. While we expect this to occur sometime in 2024, we do not control the timing of the rollout.  In our arrangement, Cognosante provides the professional services/first line support and Consensus provides the cloud fax backbone.  

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Is there an advantage to being FedRAMP certified?

FedRAMP security is the gold-standard for cloud offerings used by federal government agencies, and we will be the only FedRAMP certified cloud fax offering in the market.  The advantage from this deployment is the VA’s plan to make ECFax a facility open for use by the rest of the federal government – a federal service bureau.  As a result, revenues could be in excess of our estimate.

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What is your view on M & A for growth? Or will you grow more organically?

Since the spin was announced, Consensus has been clear that we are not an M&A-focused company. In part, this is due to the number of organic efforts that we have on our plate, as well as an aggressive hiring plan over the next two years, to enhance and deepen our technical team. However, we do look for acquisitions that are complementary to our product roadmap, will bring us additional customers and services and, most importantly, great teams of people. 

We have found such a company and Summit Health that was announced in early 2022.  There are opportunities for cross-selling of their HL7 and FHIR products into our base and the ability to sell Consensus solutions into the Summit base, which is rich in healthcare systems utilizing the Meditech EHR solution.

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